Russia and Algeria are developing a new package of military contracts with a total value of $7 billion. Algeria sent Russia an official invitation this month to participate in tenders for the building of a frigate and joint construction of other new ships. If the contract package is signed, it will make Algeria Russia's largest foreign military trading partner, when considered with last year's agreements, signed during Russian President Vladimir Putin's visit to that country in March 2006 and worth $8 billion. Algeria will thus surpass India and China in military orders with Russia, whose orders through 2010 are worth $10 billion and $6 billion, respectively.

According to Federal Military Technical Cooperation Service, talks are also underway with Algeria on the sale of Su-32 bombers, Mi28N helicopters, and additional Su-30 and MiG-29 jetfighters, Pantsir-S1 missile systems and T-90S tanks. All the contracts should be signed this year or next.

The arms producers themselves are skeptical of the perspective deal. Oleg Demchenko, president of Irkut, told Kommersant that his company was not in talks on new orders for Algeria. Uralvagonzavod has pushed the delivery date for the 40 T-90S tanks Algeria has already ordered from last year to this year. And industry source told Kommersant as well that talks between Rosoboronexport, the state arms exporter, and shipbuilders have broken down. Pantsir complexes for the United Arab Emirates have to be tested before work can begin on an Algerian order.